MINERAL AREA DEVELOPMENT AUTHORITY ETC.versusM/S. STEEL AUTHORITY OF INDIA AND ORS.

•                        [2011] 4 S.C.R. 19

       MINERAL AREA DEVELOPMENT AUTHORITY ETC.                        A
                                  v.
          M/S. STEEL AUTHORITY OF INDIA AND ORS.
               (Civil Appeal Nos.4056-64 of 1999)
                          MARCH 30, 2011
                                                                      B
       [S.H. KAPADIA, CJI, K.S. RADHAKRISHNAN AND
                 SWATANTER KUMAR, JJ.]

        Reference to larger Bench:
                                                                      c
         Mines and minerals - Royalty- Nature of- Tax on lands
    and buildings and on mineral rights - Conflict between
    decision rendered by five judge Bench of Supreme Court and
    decision delivered by seven Judge Bench of Supreme Court
    - Questions of law framed which need consideration by the         D
    larger bench - Request for reference to the Bench of nine
    Judge - Matter directed to be placed on the administrative
    side before the Chief Justice for appropriate orders - Mines
    and Minerals (Regulation and Development) Act, 1950- ss.2,
    9, 15(3) - Constitution of India, 1950 - Seventh schedule, List   E
    I, Entry 54; List II, Entries 49, 50.

         State of West Bengal v. Kesoram Industries Ltd. and Ors.
    (2004) 10 SCC 201; India Cement Ltd. and Ors. v. State of
    Tamil Nadu and Ors. (1990) 1 SCC 12; M.P. V.
    Sundararamier and Co. v. State of Andhra Pradesh (1958) 1         F
    SCR 1422; Central Board of Dawoodi Bohra Community and
    Anr. v. State of Maharashtra. and Anr. (2005) 2 SCC 673 -
    referred to.
                         Case Law Reference:
                                                                      G
        (2004) 1o sec 201         referred to           Para 5
        (1990) 1 sec 12           referred to           Para 5
        (1958) 1 SCR 1422         referred to           Para 9
                                  19                                  H
    20      SUPREME COURT REPORTS            [2011) 4 S.C.R.
                                                                 •
A        (2005) 2 sec 673      referred to          Para 11

        CIVIL APPELLATE/ORIGINAL JURISDICTION : Civil
    Appeal Nos. 4056-4064 of 1999.

       From the Judgment & Order 22.3.1999 of the High Court
B of Judicature at Patna, Ranchi Bench Ranchi, in CWJC No,
  1885, 178, 2251, 2252, 1783, 2915of1994 (R), 3113of1993
  & 269 & 268 of 1994 (R).

                             WITH

C C.A. Nos. 4710-4721, 4722-4724of1999, 1883 of 2006, T.P.
  (C) No. 722 of 2006, C.A. Nos. 4745, 4990, 4991, 4992, 4993
  of 2006, TP (C) No. 951 of 2006, C.A. Nos. 5649, 5599 of
  2006, 378, 665, 1180 of 2007, TP (C) Nos. 481, 906 of 2007,
  C.A. Nos. 3400, 3401, 3402, 3403 of 2008, 2055, 2174 of
D 2009, 6498, 6137 of 2008, SLP (C) No. 26160 of 2008, C.A.
  Nos. 6499, 6497, 7397 of 2008, 96, 97, 98 of 2009, SLP Nos.
  3849 of 2006, 763, 15900 of 2007, TP (C) Nos. 613, 626 of
  2009, C.A. Nos. 4478, 4479 of 2010 & SLP (C) No. 4191 of
  2011.
E
       Vivek K. Thanka Parag P. Tripathi, T.S. Doabia, ASG,
  Rakesh Dwivedi, K.K. Venugopal, Mahabir Singh, S.K.
  Bagaria, S.B. Upadhyay, Bhaskar, P. Gupta, Ajit Kumar Sinha,
  P. Sadasivan Nair, Dipankar Gupta, Nagendra Rai, R.F.
F Nariman, A.K. Ganguli, Shambhu Prasad Singh, H. N. Salve,
  Dr. Abhishek Manu Singhvi, Ajit Kumar Sinha, Mahabir Singh,
  Shail Kumar Dwivedi, AAG, Aparesh Kumar Singh, Tapesh
  Kumar Singh, Preetika Dwivedi, Sansriti Pathak, Gopal
  Pathak, Ma. Pooja Dhar, Gopal Sankaranarayana, Radha
G Shyam Jena, Gp. Capt. Karan Singh Bhati, Rashid, Aishwarya
  Bhati, Pawan Upadhyay, Rajesh R. Dubey, Anisha Upadhyay',
  Sharmila Upadhyay, Praveen Kumar, Bharat Sangal, Alka
  Singh, Akshat Shrivastava, P.P. Singh, lnderjeet Yadav, Anip
  Sachthey, Mohit Paul, Shagun Matta, Syed Shahid Hussain
H Rizvi, D.K. Pradhan, Ashok Kumar Gupta-I, T.G. Narayanan
•    MINERAL AREA DEVELOPMENT AUTHORITY ETC. v. 21
          STEEL AUTHORITY OF INDIA AND ORS.
      Nair, K.N. Madhusoodanan, Sunil Kumar Jain, Parmatma             A
      Singh, Vanita Bhargava, Ajay Bhargava, Nitin Mishra (for
      Khaitan & Co.) S.K. Verma, E.C. Agrawala, Ashok Kumar
      Singh, Sunil Dogra (for Lawyer's Knit & Co.), P.V. Yogeswaran,
      U.A. Rana, Devina Sehgal (for Gagrat & Co.), Ruby Singh
      Ahuja, Sridhar Potarju, Gaichangpou Gangmei, Guntur              B
      Prabhakar, Kuna! Verma, Prashant Kumar (for AP & J
      Chaambers), Gopal Prasad, Anupam Lal Dass, A. Bhavan
      Singh, Ajay Aggarwal, Kanika Gomber, Rajan Narain, Manu
      Nair, Kirat Singh, Tanuj Bhushan, Adit Pujari (for Suresh A.
      Shroff & Co.), Abhishth Kumar, Rakesh K. Sharma, Prashant        C
      Jha, Manjula Gupta, Vaibhav, Punam Kumari, Prem Sunder
      Jha, Lyna Perira, Manjula Gupta, Prashant Jha, Syed Shaid
      Hussain Rizvi, D.K. Pradhan, Manik Karanjawala, Praveen
      Kumar, Sunil Kumar Jain, Aneesh Mittal Parmatma Singh,
      Aakansksha Munjhal, Shally Bhasin Maheshwari, E.C.
                                                                       0
      Agrawala, Bharat Sangal, R.R. Kumar Vernika Tomar, Alka
      Singh, B. Vijayalakshmi Menon, Gaurav Kejriwal, Jatinder
      Kumar Bhatia, Ashutosh Kumar Sharma, Gunnam
      Venkateswara Rao, B.S. Banthia, Vikas Upadhyay, Rishabh
      Sancheti, Sunita Sharma, Rekha Pandey, Asha G, Nair, D.S.
      Mahra, V.K. Verma, Dharmendra Kumar Sinha, Ashwarya              E
      Sinha, Ambhoj Kumar Sinha, Satyajit A. Desai, Prashant R.
      Dahat, Somanath Padhan, Ashid Khan, Rajneesh Bhaskar,
    · Jyoti Tripathi, Atul Jha, Rajesh Srivastava, Ram Naresh Gupta,
      Abhishek Gupta, Milind Kumar, Kanku Gupta, Gaurav Jain,
      Abha Jain, G.N. Reddy, V. Pattabhiram, Nandini Sen, D.P.         F
      Mukherjee, Anip Sachthey, Mohit Paul, Shagun Matta for the
      appearing parties.

         The following Order of the Court was delivered
                                                                       G
                              ORDER
         Having heard the matter(s) for considerable length of time,
    we are of the view that the matter needs to be considered by
    the Bench of Nine Judges. The questions of law to be decided
                                                                       H
    22        SUPREME COURT REPORTS               [2011] 4 S.C.R.
                                                                        •
A   by the larger Bench are as follows:

         1.    Whether 'royalty' determined under Sections 9/
               15(3) of the Mines and Minerals (Regulation &
               Development) Act, 1957 (Act 67 of 1957, as
               amended) is in the nature of tax?
B
         2.    Can the State Legislature while levying a tax on land
               under Entry 49 List II of the Seventh Schedule of the
               Constitution adopt a measure of tax based on the
               value of the produce of land? If yes, then would the
c              Constitutional position be any different insofar as
               the tax on land is imposed on mining land on
               account of Entry 50 List II and its interrelation with
               Entry 54 List I?

D        3.    What is the meaning of the expression "Taxes on
               mineral rights subject to any limitations imposed by
               Parliament by law relating to mineral development"
               within the meaning of Entry 50 of List II of the
               Seventh Schedule of the Constitution of India?
               Does the Mines and Minerals (Regulation &
E
               Development) Act, 1957 contain any provision
               which operates as a limitation on the field of
               legislation prescribed in Entry 50 of List II of the
               Seventh Schedule of the Constitution of India? In
               particular, whether Section 9 of the aforementioned
F              Act denudes or limits the scope of Entry 50 of List
               II?

         4.    What is the true nature of royalty I dead rent payable
               on minerals produced I mined I extracted from
G              mines?

         5.    Whether the majority decision in State of West
               Bengal v. Kesoram Industries Ltd. and Ors, (2004)
               10 sec 201, could be read as departing from the
               law laid down in the seven Judge Bench decision
H
•
MINERAL AREA DEVELOPMENT AUTHORITY ETC. v.                    23
     STEEL AUTHORITY OF INDIA AND ORS.
          in India Cement Ltd. and Ors. v. State of Tamil           A
          Nadu and Ors., (1990) 1 SCC 12?

    6.    Whether "taxes on lands and buildings" in Entry 49,
          List II of the Seventh Schedule to the Constitution
          contemplate a tax levied directly on the land as a
                                                                    B
          unit having definite relationship with the land?

    7.    What is the scope of the expression "taxes on
          mineral rights" in Entry 50, List II of the S~venth
          Schedule to the Constitution?
                                                                    c
    8.    Whether the expression "subject to any limitation
          imposed by Parliament by law relating to mineral
          developmenf' in Entry 50, List II refers to the subject
          matter in Entry 54, List I of the Seventh Schedule
          to the Constitution?
                    ...                                             D
    9.    Whether Entry 50, List II read with Entry 54, List I
          of the Seventh Schedule to the Constitution
          constitute an exception to the general scheme of
          Entries relating to taxation being distinct from other
          Entries in all the three Lists of the Seventh Schedule    E
          to the Constitution as enunciated in M.P. V.
          Sundararamier & Co. v. State of Andhra Pradesh
          & Anr., (1958) 1 SCR 1422 at 1481 (bottom)?
    10.   Whether in view of the declaration under Section 2 F
          of the Mines and Minerals (Development &
          Regulation) Act, 1957 made in terms of Entry 54
          of List I of the Seventh Schedule to the Constitution
          and the provisions of the said Act, the State
          Legislature is denuded of its power under Entry 23 G
          of List II and/or Entry 50 of List II?
    11.   What is the effect of the expression "... subject to
          any limitation imposed by Parliament by law relating
          to mineral development" on the taxing power of the
                                                                    H
    24      SUPREME COURT REPORTS                   [2011] 4 S.C.R.
                                                                           •
A              State Legislature in Entry 50 of List II, particularly
               in view of its uniqueness in the sense that it is the
               only entry in all the entries in three Lists (Lists I, II
               and Ill) where the taxing power of the State
               Legislature has been subjected to "any limitation
B              imposed by Parliament by law relating to mineral
               development".

        Before concluding, we may clarify that normally the Bench
  of five learned Judges in case of doubt has to invite the
C attention of the Chief Justice and request for the matter being
  placed for hearing before a Bench of larger coram than the
  Bench whose decision has come up for consideration (see:
  Central Board of Dawoodi Bohra Community and Anr. v. State
  of Maharashtra and Anr. - 2005 (2) SCC 673). However, in
  the present case, since prima facie there appears to be some
0 conflict between the decision of this Court in State of West
  Bengal v. Kesoram Industries Ltd. & Ors. (supra) which
  decision has been delivered by a Bench of five-Judge of this
  Court and the decision delivered by seven-Judge Bench of this
  Court in India Cement Ltd. and Ors. v. State of Tamil Nadu
E and Ors. (supra) reference to the Bench of nine-Judge is
  requested. Office is directed to place the matter on the
  administrative side before the Chief Justice for appropriate
  orders.
    D.G.                           Matter referred to larger Bench.